1 Part I: Vision Chapter 2: Leading Strategically

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 Strategic leadership involves developing a vision for the firm, designing strategic actions to achieve this vision, and empowering others to carry out those strategic actions. 5

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 A top management team is the group of managers charged with the responsibility to develop and implement the firm’s strategies. Generally, the top management team is composed of officers of the company with the title of vice president and higher.  Homogeneous team  Heterogeneous team  Hetero or Homogeneity for TMTs: Does TMT Diversity = Performance 8

 Hiring from within = keeping talent  Most new CEOs selected for the job in an inside succession are unlikely to change in any drastic way the strategies designed under the leadership of the former CEO.  However, when the firm is performing poorly, it is more common to select an outside successor.  Or as in the case of Boeing’s Jim McNerney, there was a firm image problem with the government and customers. 9

 Remember the RBV?  Resources are the basis for a firm’s competitive advantages and strategies.  Tangible resources  Intangible resources  Financial capital  Example: TiVo and intellectual property  Example: What if Walmart’s frozen pizza suppliers attempted to “organize” and set prices? How should Walmart respond? 10

 Human Capital as a resource  Employee KSAs  Manager’s ability to execute strategy  Social Capital as a resource  Internal social capital  External social capital  Social capital is most effective when partners trust each other (strong ties). 11

 Leaders of today need the essential qualities of what we now call a Cross-Enterprise Leader—a leader adept at building, fostering and influencing a complex web of relationships across all levels—from employees, partners and suppliers to customers, citizens, and even competitors.  Scott Washburn (VP at TreeTop)- “fostering effective relationships at all levels”  Access to information first  Access to powerful “informal” leaders  Catch 22 with being “buddies” with direct reports.  MBWA, assess social networks, timed deposits and withdrawals 12

 An entrepreneurial culture encourages employees to identify and exploit new opportunities.  encourages creativity and risk taking  tolerates failure  championing innovation is rewarded  Examples: Steve Jobs & Apple  3M  Google Engineers with 20% “me time”. 13

 Strategic leaders should determine the boundaries of acceptable behavior; establish the tone for organizational actions; and ensure that ethical behaviors are expected, praised, and rewarded and the opposite for unethical behavior  Exec vs. hourly punishment….equivalent?  Recently, cases in which strategic leaders acted opportunistically in managing their firms have been a major concern: Enron & Tyco.  SOX requires massive confidence in your team. 14

 Most effective: balanced strategic and financial controls for long term evaluation of strategy content.  What get’s talked about gets done, what gets measured gets done right.  Balanced Scorecard  Financial (profit, growth, and shareholder risk)  Customers (valued received from products)  Internal business processes (asset use)  Learning & growth (culture of innovation/change)  Human Capital (KPIs  $$$) 15

 SLs have to lead through people and consider the cascading effect; they can’t be in front of everyone all the time.  SLs must manage the social network  Unsolicited deposits of information  Strategic withdrawals of information  People lead like they are led; SLs set the tone.  Modeling and reinforcement

 How to SLs build it?  Competence  Get on the winning side  Integrity  Especially the little things, be above reproach- be moral (Global phenomenon but largely U.S. centric)  Benevolence  If you have the option, give people what they don’t deserve, go out of your way obviously and rules of social transactions kick in.

 What is the result?  Access to information  Fast decisions based on candor  Better business deals based on anticipated reciprocity  From economic ONLY to include social transactions  Globally, the difference in success and failure  E.g., Jim Clifton and the Gallup Path on global contract law and enforcement

 How the Great Fall